What is the role of exchange in derivative instruments?

[Raja Kannan]

Exchange plays middle man function and ensure that no one being affected due to any transaction in Stock exchange.

eg. Collecting sufficient Caution deposit during Future contract

Settling day to day tranactions

 

[Ganesh]

To make the settlement in a smoother way. In case of derivatives market, cash compensation happens on a daily basis and exchange will take care of that from caution deposit made by the buyer and the seller.

[Guru]

<span style=”color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>Exchange plays the middle man role in derivative with help of caution deposit took from buyer and seller.</span>

[Sriram Raghavendran]

Exchange’s role is to ensure the trader’s counter party risk and the settlements.

[Gokul Ramachandran]

Exchange resolves trader counter risk. It makes MTM settlements in case of futures contract.

[Author]

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